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CJ Winchester

FHA Home Mortgage Loan

An FHA insured mortgage loan is guaranteed by the United States Federal Housing Administration. This provides mortgage insurance, and the loan will always originate from a lender that has been approved by the Federal Housing Administration, which protects the borrower.

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FHA loans are set up in order to make it easier for families or individuals with less income to be able to buy homes, when they might not be able to do so under any other circumstances. This program opens up a lot of opportunities, and it is definitely something that should be considered by anybody who is in a lower income bracket and still wants to find a way to buy a home. The Federal Housing Administration loan program started in the 1930s during the Great Depression. The goal of the program was to try to protect lenders and borrowers while still minimizing the number of defaults and foreclosures.

There are, however, some requirements that must be met in order to be eligible for an FHA loan. There is a premium of 1.75 percent that has to be paid to the FHA up front, and this is often rolled into the loan amount and paid by the lender. There is a monthly premium, as well. As a result, this is a more expensive loan.

While an FHA loan makes a lot of sense for those who are in a position where they do not have better options, the total interest and fees will be higher than conventional loans. As a result, if a borrower does have other options for the loan, usually the FHA loan will not be the best option.

There are also a number of requirements that are laid out by the Federal Housing Administration on loan limits, housing types and debt ratios. The goal is to try to avoid people who are not only in a lower income bracket, but also pose an exceptionally high risk of default.

As a result, it is important to prepare for the process to make sure that you meet all of the requirements. We have a team of experts at The Davidson Group, who handle a variety of cases. Many of them specialize on FHA loans and can sit down with you and walk you through the guidelines in order to determine whether or not you might qualify.

If you do, they can help you submit the information and begin the process.